Taxi Fare Up Again, Taxi Owners: Too Little an Uplift

Yesterday, the Executive Council approved that all taxis in Hong Kong (including red, green and blue cabs) to raise their meter fare by US$0.25 (first 2km flat fare), an average of 10% increase, and each click (every subsequent 200m) will be up by US$0.02. The new fare is expected to take effect on 8th December. The last taxi fare uplift started merely two years ago. Red taxi drivers worry that taxi owners will take this opportunity to bump up the rental and the number of customers will be reduced, “at the end, the taxi drivers are the ones who suffered from this”. However, taxi owners of green (New Territories) taxis complained that the uplift is too small.

The taxi sector applied for an increase of fare to the government early this year: red taxi: US$0.25; green taxi: US$0.32; blue taxi: US$0.39; each click: US$0.02. The Executive Council yesterday approved the following new taxi fare:
Red taxi – First 2km: US$2.83 (from US$2.57); each click: US$0.21
Green taxi – First 2km: US$2.38 (from US$2.12); each click: US$0.18; every baggage and telephone booking: US$0.65 (same as that for Red taxi)
Blue: First 2km: US$2.19 (from US$1.93 – a 13% increment); each click: US$0.18

Some taxi drivers estimate that the fare for a ride from Central Ferry Pier to Excelsior Hotel Causeway Bay will be up from US$3.86 US$4.25, a ride from Causeway Bay to Chai Wan will cost US$8.36 instead of US$7.71, representing an average of 10% increase.

A spokesperson from Transport and Housing Bureau said that the approval was based on the significant increase in expenses on fuel, maintenance and insurance, which means drivers’ income cannot match inflation. The Bureau also estimated that this increase will push next year’s Composite Consumer Price Index up by 0.03%.

Lee Hong-chun, Chairman of Association for the Rights of Taxi Drivers, worries that there will be even less customers after the fare uplift, “if a driver has two less customers a day, he’d easily loose US$10 a day!” Taxi owners will most certainly raise the rental for drivers, “the increment will only be able to match the increase of taxi rental. Combining this with less customers, the taxi drivers are the ones who suffer from it.”

LAI Ming-hung, United Friendship Taxiowners & Drivers Association Ltd, estimated that after the fare uplift, taxi drivers will see at least 10% decrease in customers, and he hopes that taxi owners will not immediately raise the taxi rental.

Some taxi owners, however, think that uplift is not significant enough. Ng Kwan-shing, Chairman of Taxi Dealers & Owners Association Ltd, said that the fare of green taxi did not get an uplift last time when the red taxi did. The original application was to increase the start fare by US$0.32, and he has no choice but to accept the approved uplift of US$0.25.

Editor’s Note:The majority of the taxi drivers in Hong Kong do NOT own the taxi they drive – they hire it from the taxi owners. This is because most people cannot afford to buy a taxi license to operate as each license costs between US$650,000 to US$900,000. A taxi license used to cost not more than US$320,000 a few years ago. According to people who’ve been studying the problem, a lot of the taxi owners would refuse to lease their taxi to drivers at a cheaper rent and even leave their taxis empty and not on the road running in order to continue supporting the taxi license bubble, pushing the license price up further. This is one of the reasons why it is very difficult to find a taxi during rush hours.
The drivers of “discounted taxis” in Hong Kong work extra hard and actually make a decent living even after giving a small discount for long journey. Many in the taxi industry were against this group of drivers, but the result, according to those who’re familiar with the industry’s operation, is that taxi owners can bump up the taxi rental price and apply for a fare uplift repeatedly. The taxi fare has gone up by 47% in the past five years (four uplifts). Even though the passengers are paying a lot more for the same service, but the taxi drivers do not see any of the benefits, in fact they make less money than before the uplifts. The only winners of this game are the taxi license holders/taxi owners.